Harvest concluded Dec. 1, according to a recent report by the Ministry of Agricultural Policy and Food of Ukraine (MAPFU). Rapeseed production was 2.2 million tonnes while soybean production totaled 3.8 million tonnes, a 12% decrease. Sunflower seed production was 11.6 million tonnes, down nearly 15% from the previous year.
Changes in tax legislation and excess crush capacity likely will lead to additional processing activity and higher exports of processed products, according to a report from the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS).
While nearly 100% of sunflower seeds are processed internally, soybeans and rapeseed are exported as unprocessed bulk commodities and also processed into meal and oil for export.
The Ukrainian state budget for 2018 abolishes value-added tax refunds for exports of unprocessed soybeans, rapeseed and sunflower seeds after March 1, 2018.
“This change could tip the scales from exporters of oilseeds in favor of processors that export oils and meals,” the FAS said. “Among the oilseeds affected, the larger impact of this change will be felt in MY 2017-18 by soybean exporters, which typically ship between 30% to 50% of total exportable amounts between March to September.”
The impact on rapeseed exporters will be minimal, the FAS said, because less than 10% of rapeseed is typically exported between March and June.
Crush volumes for soybeans and rapeseed in 2017-18 are forecast to increase due to excess domestic crush capacity and lower harvest numbers for sunflower seed.
“This scenario assumes that the difference between world market prices for oilseeds and processed products (oils/meals) will allow for the domestic crushing industry to have favorable margins and remain competitive with oilseed exporters,” the FAS said.